MTA finances are better, but still risky: Report
MTA fares have climbed much faster than the inflation rate in recent years, and "nearly all" of the money generated by next year's planned fare hike will be needed just to pay for existing projects and agency debt, according to a new financial analysis.
The state comptroller's annual financial outlook report on the MTA, released Tuesday, shows that although the MTA's budget has been looking better over the past two years, the financially plagued agency still faces big hurdles, including the slow economic recovery, union negotiations and uncertainty surrounding its payroll mobility tax, which a state judge ruled unconstitutional in August. That ruling is under appeal.
While acknowledging those challenges, state Comptroller Thomas DiNapoli said the MTA's fare and toll hikes are a "burden" on working New Yorkers, and should be a "last resort."
His office reported that by 2015, fares and tolls will have climbed by 35% since 2007, while inflation has gone up by about 15%. The MTA is planning 7.5% fare hikes next March, and others in 2015 and 2017.
But DiNapoli said he doesn't expect the MTA to reverse their plans.
"Given how fragile the finances are . . . I don't think anybody's anticipating any immediate rollback on what they've already built into their plan with regard to the toll and fare hikes," he told amNewYork last night.
In a statement, MTA Chairman Joe Lhota said he appreciated DiNapoli's "thoughtful and thorough analysis" of the agency's financial plan.
"His report recognizes the significant financial challenges the MTA faces in the near term, the aggressive steps we have taken to meet them, and our ongoing efforts to address longer-term challenges," Lhota said.
Bill Henderson, of the MTA's Permanent Citizens Advisory Committee, said it was "sobering" to see that the MTA's debt service will increase to $3 billion by 2016, even with higher fares.
"The problem with borrowing huge amounts of money is that you have to pay them back eventually, and you have to pay them back with interest," Henderson said. "There's a big reliance on debt, and that's frightening."
The report also says that various cost-cutting initiatives are expected to save the MTA $1.1 billion annually by 2016. Nearly half that comes from overhauling how the MTA provides transit services for the disabled. (With Newsday)
-- Fares and tolls will have increased 35% from 2007 to 2015 if a planned 7.5% hike is approved next year.
-- Fare and toll increases represent 82% of the money being used to close MTA operating deficits over the next four years. Management cost-cutting will cover 18%.
-- The MTA paid $655 million in overtime to workers last year and expects to pay $578 million this year - $25 million more than it originally budgeted.
-- Health and welfare costs are projected to rise by 42% over the next four years, reaching $1.2 billion by 2016. Pension costs are expected to rise from $1.3 billion in 2012 to $1.5 billion in 2016.
-- The MTA is borrowing $14.8 billion to pay for its 2010-2014 capital plan - about 60% of the plan's total costs. Debt service is expected to reach $3 billion by 2016.
-- Cost-cutting initiatives started in 2010 are expected to save the MTA $1.1 billion a year by 2016.